Employment Law

What to Do When an Employee Dies

A death in the workplace can feel like a death in the family. Whether it’s sudden or expected, the death of an employee can be traumatic for staff and management. The following tips may help you navigate the needs of your company and your employees during a difficult time.

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Immediate Response

It’s generally best to contact the employee’s family as soon as possible to ask how much information they feel comfortable sharing. The family may wish that certain details be kept private—for instance, the cause of death—and it’s important to respect their wishes.

Next, notify employees about the death as soon as possible. Let HR and the employees who worked closely with the deceased worker know about her death first, in private, before you make a general announcement. Keep things simple, sharing whatever details the family is comfortable letting others know.

It may be helpful to provide information about funeral services and any memorials your office may be arranging. Let employees know of any employee-assistance resources your company offers, and consider making grief counseling available on-site.

If the employee had business relationships with clients, customers, or suppliers outside your organization, you’ll want to inform them in a simple and respectful manner. You should also address who will be handling phone calls and e-mails directed to the employee.

Company Property

You should follow your normal termination and security procedures when an employee dies. The employee’s computer and building access should be terminated, and certain electronic devices may need to be wiped remotely. Make arrangements with the family’s contact person for the return of all company equipment and the retrieval of any personal items she kept at the workplace.

Company equipment may include a laptop, cell phone, or other electronic devices; tools or equipment; keys; company credit cards or purchasing cards; or uniforms. A trusted colleague may be an option if the family prefers not to be involved in the exchange of company and personal property.

Transition of Work

Discuss any major outstanding issues and tasks with the deceased employee’s supervisors, close coworkers, vendors, and others. Next, meet with staff, and figure out how to distribute the employee’s work.

Out of respect, you should avoid immediately advertising for a replacement. Temporary employment agencies can provide short-term solutions, even up to the executive level. And when it’s time to hire a permanent replacement, be sensitive to your other employees’ need to remember their colleague.

Payroll

In almost all cases, a deceased employee accrued some salary, wages, or paid time off before her death. How to handle the employee’s final paycheck will depend on the situation. Many companies use direct deposit, and it may not be possible to stop an automatic deposit right away. If you can stop the deposit, you should issue a paper paycheck in the employee’s name and hold it until you are notified how her final affairs will be handled.

As a general rule, don’t make the employee’s final paycheck payable to the surviving spouse or any other beneficiaries. Doing so could make you responsible to the creditors of the deceased employee for the amount you paid to the wrong person. If an estate will be opened, the paycheck should be made payable to the employee’s estate. The company can physically release the check to the personal representative of the estate (either an “executor” or an “administrator”) after you receive the court’s letters of appointment.

For various reasons, the creation of a formal estate may not be necessary. In that case, an individual may be able to claim the employee’s final paycheck by providing an affidavit to your company. If the total value of the employee’s property subject to probate is less than $50,000 (for someone dying after July 1, 2018) and the employee’s successor presents an affidavit that complies with Iowa Code Section 633.356, you can release the final paycheck to that individual without liability.

If no personal representative is appointed for the employee’s estate and you don’t receive an affidavit, you should wait one year and then pay the wages to the Iowa Treasurer’s Office as unclaimed property. Before you distribute any funds, it’s very important to consult an attorney to determine the withholding requirements.

Benefits

Once your company is informed of an employee’s death, you should begin to process any benefit payments, and notify any third-party administrators that may oversee your benefit plans. Locate the beneficiary designation forms for all benefits, including life insurance, flexible spending accounts, accidental death and dismemberment insurance, retirement plans, and workers’ compensation death benefits. Contact the beneficiaries and let them know how they can make a claim for benefits. Inform them that they will likely need to provide a death certificate for each policy or plan.

You should also direct your insurance carrier to terminate the employee’s health insurance coverage as of the date of her death. It’s important to remember that death counts as a COBRA qualifying event for a covered employee’s spouse and dependent children. If your organization must comply with COBRA, you should notify your health plan administrator of the employee’s death.

Bottom Line

The death of an employee can be a difficult time in the workplace. In addition to handling the final paycheck and paying out benefits, an employer must consider the return of company property and continue to follow its standard security procedures.

Breanna L. Young is an Estate Planning Attorney with Davis Brown Law Firm and contributes to the Iowa Employment Law Letter. She can be reached at or breannayoung@davisbrownlaw.com. Jana L. Weiler is an Attorney with Davis Brown Law Firm and contributes to the Iowa Employment Law Letter. She may be reached at janaweiler@davisbrownlaw.com.